US July NFP data disappoints, ISM manufacturing offers comfort - ING

FXStreet (Łódź) - James Knightley from ING suggests that the disappointment following the release of the lower than expected US July employment numbers was offset somewhat by the positive ISM Manufacturing reading.

Key quotes

"Payrolls rose 209,000 and while there were a net 15,000 upward revisions, it was a bit softer than the 230,000 consensus."

"There was worse news on the unemployment rate front. It actually rose to 6.2% from 6.1% – the market was looking for it to stay at 6.1%, but we were thinking a sub-6% figure was possible."

"The average earnings numbers were also much more subdued than we had predicted, showing annual growth of 2% versus the market’s prediction of 2.2% and our forecast of 2.3%."

"While the jobs reports was fairly poor we actually got a very robust ISM manufacturing index. It rose to 57.1 in July from 55.3 in June, leaving the index at its highest level since April 2011."

"This is good news for the US growth story with the headline ISM index at levels historically consistent with GDP growth running in excess of 4% YoY versus the current rate of 2.4%."

"It also backs up our positive assessment on the US economy and our view that the labour market will continue to strengthen, inflation pressures will build, the dollar will rally a lot further and the Fed will tighten earlier than the market currently anticipates."